Saudi Arabia’s residential market experienced robust growth in demand in the first quarter of 2024. In Riyadh, sales transactions increased by 77 percent year-over-year, according to a new report.
The global consultancy firm CBRE found that residential transactions in Jeddah surged by 92.9 percent in the first three months of 2024, while Dammam saw a 28.0 percent increase compared to the same period the previous year.
Residential sector outperforming commercial
Taimur Khan, head of research MENA at CBRE, commented that while the commercial sectors within Saudi Arabia had seen strong performance in the recent past, which continued to date, the residential sector was now also beginning to register a significant surge in demand, which was in turn underpinning performance in the sector.
Expectation of continued growth and bifurcation
Khan expects this trend to continue, with demand outpacing supply for some time, though he notes there may be “some bifurcation in performance within the residential sector, with new quality assets likely to register record rates.”
Residential pricing trends across major markets
In terms of pricing, villa prices rose in Riyadh (3.6 percent), Jeddah (0.2 percent), and Khobar (3.1 percent), but declined slightly in Dammam (-0.5 percent). Apartment prices increased in Riyadh (8.4 percent), Dammam (0.9 percent), and Khobar (0.4 percent), but decreased in Jeddah (-1.1 percent).
Office sector sees slowdown in rental growth
The office sector saw a slowdown in rental growth across all market segments in Q1 2024. However, prime rents in Riyadh surged by 14.5 percent, while Grade A and Grade B rents increased by 11.8 percent and 10.3 percent, respectively. Occupancy rates remained high, reaching over 93 percent in prime, Grade A, and Grade B segments in Riyadh.
Strong performance in the hospitality sector
The hospitality sector’s performance also remained strong, with a slight uptick in average occupancy rate (0.1 percentage points) and significant increases in average daily rate (11.8 percent) and revenue per available room (12.0 percent) year-over-year.
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